```

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 545 Introduced in House (IH)]

113th CONGRESS
  2d Session
H. RES. 545

 Expressing the sense of the House of Representatives that the Federal 
   Government should adopt and use accrual basis generally accepted 
 accounting principles for Government budgeting, financial reporting, 
                  and performance evaluation purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 7, 2014

 Mr. Renacci (for himself, Mr. Conaway, Mr. Sherman, and Mr. Murphy of 
Florida) submitted the following resolution; which was referred to the 
              Committee on Oversight and Government Reform

_______________________________________________________________________

                               RESOLUTION

 
 Expressing the sense of the House of Representatives that the Federal 
   Government should adopt and use accrual basis generally accepted 
 accounting principles for Government budgeting, financial reporting, 
                  and performance evaluation purposes.

Whereas President Thomas Jefferson instructed Secretary of the Treasury Albert 
        Gallatin in 1802: ``If . . . there can be added a simplification of the 
        form of accounts in the Treasury Department, and in the organization of 
        its officers, so as to bring everything to a single centre, we might 
        hope to see the finances of the Union as clear and intelligible as a 
        merchant's books, so that every member of Congress, and every man of any 
        mind in the Union, should be able to comprehend them, to investigate 
        abuses, and consequently to control them.'';
Whereas, in 1949, the findings of the first Hoover Commission were endorsed by 
        President Harry Truman, and the Commission's recommendations were issued 
        to Congress in nineteen separate reports, resulting in the passage of 
        the Budget and Accounting Procedures Act of 1950, giving the General 
        Accounting Office the authority to make it a requirement that agency 
        accounting systems be maintained on the accrual basis in order to secure 
        Comptroller General approval;
Whereas, in 1955, the findings of the second Hoover Commission Report were 
        endorsed by President Eisenhower and reported to the United States 
        Congress which passed Public Law 84-863, in 1956, establishing the 
        following: ``As soon as practicable . . . the head of each executive 
        agency shall, in accordance with the principles and standards prescribed 
        by the Comptroller General, cause the accounts of such agency to be 
        maintained on an accrual basis to show the resources, liabilities, and 
        costs of operations of such agency with a view to facilitating the 
        preparation of cost-based budgets . . .'';
Whereas, in 1967, President Lyndon Johnson's Commission on Budget Concepts, a 
        temporary ``blue ribbon'' commission headed by the Secretary of the 
        Treasury David Kennedy, recommended that the accrual basis of measuring 
        receipts and expenditures be substituted for the cash basis at ``as 
        early a date as feasible.'';
Whereas, in 1969, President Richard Nixon reaffirmed the conclusions of 
        President Johnson's Commission on Budget Concepts to make the conversion 
        for the Federal Government from the cash basis to the accrual basis of 
        accounting;
Whereas, in 1976, before the Committee to Investigate a Balanced Federal Budget 
        of the Democratic Research Organization on Implementing Accrual 
        Accounting Within the Federal Government, Comptroller General Elmer 
        Staats stated the following: ``In summary, accrual accounting in the 
        Federal Government has been a legal requirement since 1956. Since 
        accrual accounting is fundamental to sound financial management it has 
        always been a basic tenet of our principles and standards. I believe 
        that current economic conditions and the extensive government use of 
        deficit financing have accentuated the need for the Federal Government 
        to provide better overall financial reports that show clearly for the 
        benefit of the Congress and the public the major aspects of its 
        financial position and operations.'';
Whereas, in 1984, the United States Treasury prepared its own prototype version 
        of the United States Government's annual consolidated financial 
        statements with a ``reconciliation schedule of accrual operation results 
        to the cash basis budget as of September 30, 1983 and 1982,'' but 
        deviated from accrual accounting by removing, from the financial 
        statements, the actuarially computed long-term liability for Social 
        Security and Medicare;
Whereas, in October 1990, a ``Memorandum of Understanding on Federal Government 
        Accounting Standards among the General Accounting Office, the Department 
        of the Treasury, and the Office of Management and Budget'' established 
        the current Federal Accounting Standards Advisory Board to determine 
        ``accounting standards'' that are appropriate for the United States 
        Government's annual financial statements, as requested of the Director 
        of the Office of Management and Budget in the Chief Financial Officers 
        Act of 1990;
Whereas, in November 1990, President George H.W. Bush signed the Chief Financial 
        Officers Act of 1990, establishing a Chief Financial Officer for the 
        United States, within the Office of Management and Budget, for each 
        major United States department and agency, and requiring the annual 
        financial statements of the United States Government to be publicized 
        annually;
Whereas, in October 1992, the National Executive Committee of the Association of 
        Government Accountants adopted the recommendations of the organization's 
        Truth in Budgeting and Accounting Blue Ribbon Task Force, calling for, 
        among other things, ``the use of an accrual basis of accounting, 
        including realistic treatment of all unrecorded and contingent 
        liabilities'';
Whereas, in 2003, Federal Reserve Chairman Alan Greenspan, in testimony before 
        Congress, stated that the use of accrual-basis accounting for the 
        Federal Government ``would lay out more clearly the true costs and 
        benefits of changes to various taxes and outlay programs and facilitate 
        the development of a broad budget strategy . . . In doing so, these 
        accounts should help shift the national dialogue and consensus toward a 
        more realistic view of the limits of our national resources.'';
Whereas, in 2009, the American Institute of Certified Public Accountants, in a 
        letter to the Federal Accounting Standards Advisory Board, stated that 
        ``we continue to believe that the social insurance programs . . . are 
        currently executed and publicized as exchange programs and that there 
        should be expense and liability recognition.'' (on the accrual basis);
Whereas the 2012 financial statements for the United States Government refer to 
        the accounting system used by the Department of the Treasury in 
        preparing annual reports as a ``modified-cash'' basis, not an accrual 
        basis;
Whereas, on June 25, 2012, the Governmental Accounting Standards Board, an 
        organization created to establish and improve standards of State and 
        local governmental accounting and financial reporting, voted to approve 
        statement No. 68, ``Accounting and Financial Reporting for Pensions'', 
        improving the way State and local governments report their pension 
        liabilities and expenses, and resulting in a more faithful 
        representation of the full impact of these obligations by reporting net 
        pension liabilities on the balance sheet (providing citizens and other 
        users of these financial reports with a clearer picture of the size and 
        nature of these financial pension obligations);
Whereas the adoption of Governmentwide accrual accounting for budgeting and 
        financial reporting would not infringe on the explicit constitutional 
        power of Congress and its respective committees to appropriate and 
        collect--through taxation, fees, and borrowing--Federal funds determined 
        on a cash-flow basis, necessary for the collection, disbursement, and 
        management of the United States cash resources; and
Whereas the continuing use of the cash basis of accounting for the compilation 
        of the annual budget substantially understates Federal expenses and 
        annual budget deficits, and the use of modified cash-hybrid accrual 
        accounting for the preparation of the United States Consolidated Annual 
        Financial Statements does not present fairly, nor accurately, the 
        financial condition and results of operation of the consolidated 
        departments and agencies of the United States: Now, therefore, be it
    Resolved, That the House of Representatives--
            (1) agrees to consider legislation to implement accrual 
        basis generally accepted accounting principles for United 
        States Government budgeting, financial reporting, and 
        performance measures;
            (2) acknowledges that the use of accrual basis accounting 
        for United States Government budgeting, financial reporting, 
        and performance measures would provide a more accurate measure 
        of the United States Government's finances and their impact on 
        the Nation's economy;
            (3) requests the Comptroller General of the United States 
        to prescribe the manner in which accrual based generally 
        accepted accounting principles can be applied to United States 
        Government budgeting, financial reporting, and performance 
        measures in the fiscal year following the passage of 
        legislation to implement the reforms outlined in this 
        resolution; and
            (4) recognizes the use of accrual accounting standards in 
        the Federal Government can assist in management improvement for 
        the agencies and departments of the Federal Government--
        publicizing true costs, minimizing government waste, and 
        controlling inefficient spending, especially on long-term 
        Government contracts.
                                 <all>
```